Using the False Claims Act to Respond to Fraud Scandals Inside the Military

03/20/2014 (press release: FalseClaims) // Kathleen R. Scanlan

On February 5, 2014, Defense Secretary Chuck Hagel acknowledged that there may be a “systemic” ethics crisis inside the U.S. military. Hagel’s comment came after several high-profile reports have come to light.

The Army disclosed a kickback scheme involving National Guard recruiters collecting hundreds of millions in incentive payments for recruits. The misconduct included both officers and soldiers.

More recently, the Air Force has acknowledged a cheating scandal in the testing program for personnel who man the Air Force’s nuclear missile program.

The Navy, meanwhile, is investigating a different cheating scandal in its own nuclear propulsion school. The Navy cheating scandal comes on the heels of details recently released on one of the largest cases of defense contractor fraud in Navy history involving the biggest contractor doing business with the Navy’s Pacific Fleet.

At the end of 2013, the Justice Department announced an enforcement action accusing a Singapore-based contractor, Glenn Defense Marine Asia——of bribing Navy officers with prostitutes, lavish trips, and cash, in exchange for inside information and preferential treatment in the awarding of contracts. Glenn Defense, which furnished fuel, food, and other support services to Navy ships in ports ranging across Malaysia, Thailand, and Japan for many years, is accused of submitting “hundreds” of false and inflated invoices to the Navy. The Navy has now terminated $200 million in contracts with Glenn Defense. Damages in this case exceed $20 million and are set to rise, federal prosecutors say. Meanwhile, several Naval officers accused of facilitating the scheme have been charged with bribery, suspended, or placed on leave.

With the scandals mounting, it should come as no surprise that Defense Secretary Hagel is voicing concern. However, the armed services have been soft targets for cheating and fraud scandals for hundreds of years. Indeed, the False Claims Act was enacted to combat fraud against the Union Army during the Civil War. As Hagel steps up to address this “systematic” crisis he ought to emphasize the number one fraud-fighting tool that has been in the government’s arsenal for more than one hundred and fifty years – the False Claims Act — and invite whistleblowers to come forward with evidence of these schemes. The FCA with its unique qui tam provision is a proven weapon for rooting out this misconduct and deterring future misconduct.